In an age when the main function of politicians seems to be no more than making noises to fill the 24 hour news cycle, we should not be surprised by the mediocre hodgepodge of microwaved spending commitments Prime Minister Johnson dressed up as a “New Deal” today. Most of the spending had already been included in a Budget that was instantly forgotten when SARS-CoV-2 arrived. Meanwhile the few new commitments – road building and converting commercial property to residential – harks back to a bygone age when “modernisation” meant switching the economy from coal to oil.
The announcement is more symbolic than substantive; sending a warning to a Labour opposition once more embroiled in antisemitism, that the Tories intend challenging their poll lead on economic issues. For several decades, the majority of the electorate in England and Wales has shifted to become increasingly redistributive on economic issues but conservative on social issues… the very opposite of the direction the Labour Party has taken since 1997; and explaining why, despite years of austerity since 2010, the Tories were able to win three subsequent elections. Johnson’s talk of a New Deal taken together with the massive borrowing and spending to deal with the pandemic signals an intention not just to hang onto the “red wall” seats won last December, but to increase their majority by winning even more former Labour seats next time around. Perhaps Johnson has heeded the warning given by Tory (but often accurate) pollster Lord Ashcroft:
“Nearly a quarter of Labour defectors, including 17% of Labour-Conservative switchers, still identify with Labour or think of Labour as ‘their’ party. Voters as a whole are as likely as not (and Labour defectors are more likely than not) to say they would trust Labour more than the Conservatives with Britain’s public services. Though only a minority say they think the Labour Party ‘wants to help ordinary people get on in life,’ ‘stands for fairness,’ or that it’s ‘heart is in the right place,’ voters as a whole are still more likely to say they are true of Labour than the Tories. One in five Labour defectors, and 14% of Labour-Conservative switchers, say ‘2019 was an unusual election and the reasons I didn’t vote Labour were very specific – I will probably vote Labour again next time.’ Only 17% of Labour defectors, and only a quarter of Labour-Conservative switchers, say they cannot see themselves voting Labour again in the future…
“Ultimately, the Labour Party will have to decide for itself whether it wants to get back in touch with those people or scurry back down the rabbit hole of socialist theory. Conservatives, meanwhile, should ignore Labour’s travails completely and act as though they are already faced with the kind of Opposition that is ready to supplant them at any moment.” (my emphasis)
According to Ashcroft, voters who switched from Labour to the Tories in 2019, saw the Johnson government as a “new beginning” rather than a continuation of the Tory governments which had gone before. Johnson’s announcement of a “New Deal” along with his statement last week that there will be no return to austerity is intended to symbolically confirm that things will, indeed be different.
This, then, is the shadow. What of the substance?
As the BBC’s “Reality Check team” point out, the sums of money involved bear no comparison with the actual New Deal of the 1930s:
“Remember that the New Deal ran over several years, with spending each year between about 5% and 7% of the total output of the economy (GDP) each year. Boris Johnson’s £5bn amounts to less than a quarter of one percent of GDP.”
Perhaps the most interesting part of the spending package is the one with the smallest amount of money attached – the £500 million for so-called “shovel-ready” projects in historically neglected regions of England like the red wall seats won in December. In part this is because the projects will have local input. They also provide the first concrete example of the Johnson-Cummings pledge to rebalance the economy in favour of the places left behind by four decades of neoliberalism.
Beyond this, though, is an ill-conceived road building programme that is out of step both with the wider adoption of home-working – which would be better served by the Labour proposal to install fibre optic broadband to every home and business in the UK – and with the growing demand for the post-pandemic recovery programme to align with the UK’s carbon reduction commitments. In addition, given that it is unlikely that global oil extraction will ever again reach its 2018 high point, investment in electrifying Britain’s antiquated rail network and building more urban electric tram systems make more sense than a road building programme that is little more than an unthinking return to the economic policies of the 1960s which only worked because Britain was then switching from coal to oil.
Largely unnoticed by the establishment media, the Climate Assembly UK – the Citizens’ Assembly conceded to Extinction Rebellion last year – issued an interim report calling for the pandemic recovery programme to be focused on Britain having net zero greenhouse gas emissions by 2050:
“79% of assembly members ‘strongly agreed’ or ‘agreed’ that, ‘Steps taken by the government to help the economy recover should be designed to help achieve net zero.’ 9% strongly disagreed or disagreed. 12% were unsure…
“93% of assembly members ‘strongly agreed’ or ‘agreed’ that, ‘As lockdown eases, government, employers and/or others should take steps to encourage lifestyles to change to be more compatible with reaching net zero.’ 4% strongly disagreed or disagreed. 3% were unsure.”
They will no doubt be disappointed to find that the only vaguely “green” spending commitment offered by Johnson was a repeat of the pledge to plant 75,000 acres (about 30,000 hectares) of trees every year between now and 2025. As the BBC fact checkers note:
“Conservative-led governments over the past decade have consistently fallen short of targets for tree-planting set out in their election manifestos. Government funding and support saw about 3.6 million trees newly planted in England in the two years from 2017 to 2019, covering an area of about 2,300 hectares. That figure does not include trees planted to replace others that have been cut down.”
It is equally notable – and disappointing – that Labour leader Kier Starmer’s criticism of the announcement failed to mention any of the “Green New Deal” proposals set out in the 2019 manifesto. Like the Tories, Starmer’s Labour seems more concerned with creating jobs and generating growth than with the environmental cost.
What neither Johnson nor Starmer, and the parties they represent, seem able to grasp is that the global economy was already in a period of accelerating de-growth by the start of 2020 anyway. The pandemic, and the unplanned (and in the UK’s case, cack-handed) response to it, has merely accelerated a crisis which had already begun. Crucially – and despite the claims of economists who don’t know any better – the price of oil – the primary energy source which drives the global economy – is only low because demand has fallen off a cliff. As economies begin to unlock, demand will rise and the current stockpiles will soon be gone. When that happens – most likely in the autumn when the government support programmes also come to an end – we will be faced with a sharp shortage which cannot quickly be made up by an oil industry which has lost considerable capacity as a result of the lockdown. In the short-term, this means a sharp price spike which will be unaffordable to an economy which is already severely weakened.
Because we have been conditioned to believe that energy is just another input to the economy, very few people understand the danger that we now face. In previous downturns when there was plenty of cheap oil beneath the ground, a temporary increase in price would result in additional drilling leading to more extraction. Since 2005, though, the price of oil has failed to rise high enough to make new conventional extraction viable. The one exception to the downward trend has been a US fracking industry which accounts for all of the global growth in oil extraction since 2010. But the apparent success of the US fracking industry owes more to investors desperately searching for returns in an artificially low-interest environment than it does to the economics of fracking itself. For the most part, fracking has involved pumping billions of dollars into an industry that extracts millions of dollars of oil in return. There is only so long that investors – and likely soon the US state itself – can maintain this subsidy before the whole house of cards comes tumbling down.
The point is that the “post-oil” future that so many people have bought into is very different to the post-oil future that is about to be foist upon us. And while renewable energy technologies are anything but renewable, they can still provide us with the means to maintain – at least temporarily – some of the more civilised aspects of modern living, such as a basic public healthcare service, electrified public transport, and access to clean water and safe sewage disposal, while we attempt to manage de-growth. Furthermore, it makes sense to utilise rather than eschew the remaining fossil fuels available to us to ease the transition to a less material and more localised future.
In the grand scheme of things, Boris Johnson’s spending announcement will make little difference either way. It will not produce the desired economic growth – you can print currency but you can’t print wealth – nor will it do anything to halt climate change or prepare us to face the reality of looming resource shortages. And so long as opposition parties also remain wedded to the infinite economic growth delusion, as with the pandemic itself, it is only when the proverbial hits the fan that anyone is going to take action… and by then it will be decades too late.
As you made it to the end…
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